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Cryptocurrency Crash Could Signal Rise in Safe Havens Gold & Silver

Gold and bitcoin on graph

The cryptocurrency market has seen a massive downturn in value recently, with frontrunner bitcoin dropping more than $1000 in just twenty-four hours. This led to a snowball effect with other cryptocurrencies, including ethereum and ripple.

The reasons behind this drop remain largely unknown, although many within the trade industry state that the news of Goldman Sachs cancelling their plans for a crypto-trading desk may have had something to do with it. When the price of bitcoin fell, many chose to panic-sell other cryptocurrencies, resulting in an industry-wide loss of around 80% of value.

The Volatility of Cryptocurrency

As we discussed in a previous blog, the volatility of cryptocurrency – in spite weeks of heavy gains – is likely to always be its downfall. In instances like these, we can see an upturn in the value of gold and silver as people choose safe havens as more viable and less risky long-term investments.

So, why does cryptocurrency see such fluctuations and why should you choose to diversify your investment portfolio with precious metals?

The issue with cryptocurrencies is that there are very few people holding much of the power. These large-scale investors are known as ‘whales’, an analogy to their size within the market. They can make investment decisions that influence the entire market, inducing either panic buying or selling. This manipulation of the market is rife within the cryptocurrency market because the big players dictate the game for everyone else.

Although there are big players in the gold and silver markets, their influence is not so all-encompassing.

Gold and Silver’s Inherent Value

The nature of gold and silver makes them inherently valuable. The more finite something is, the more valuable it becomes. We know there is only so much gold and silver on the planet and, although it can be repurposed, there will only ever be the same amount. This used to be the main influencer of bitcoin’s value – i.e., there will only ever be 21million bitcoins mined. However, with hard forks (changes in the blockchain rules voted on my miners and members of community), the rules of the game have the ability to change at any time.

Gold and silver’s value have increased and decreased over time, but its significance to us both as investors and anthropologically make it unlikely to ever lose its intrinsic value.

What Should You Invest In?

Diverse portfolios often perform better than those with all the eggs in the same basket, but that’s not to say you need to have a bit of everything in order to be successful. If you have cryptocurrency investments that are performing badly in the light of the recent dip, it may be wise to look into investing into more tangible assets.

You can buy and sell gold and silver from Gold Investments. Find out more by browsing the website or call us today to discuss your options.